The Victorian premier, Denis Napthine, has said he wasn't directly involved in a government decision to hand a $1.5m state grant to a businessman with whom he co-owns a racehorse.

Napthine has confirmed he is one of 10 part-owners of Spin the Bottle, but said he was unaware who the others were when he first bought the share.

He part-owns the racehorse with Colin McKenna, the head of a meat processor, the Midfield Group, in Napthine's south-west Victorian electorate, Fairfax Media reported.

In March, the premier announced a $1.5m grant to help McKenna's business expand, creating 200 jobs.

"It was a decision that I wasn't directly involved in," he said on Monday. "It was a decision endorsed by the city of Warrnambool, endorsed by Regional Development Victoria and signed off by the minister for state development."

Napthine said the company was a large employer and significant exporter and the creation of more jobs for Warrnambool was a "great outcome".

Labor had approved similar grants for the company during 2008 and 2009, he added.

The premier said his interest had been properly declared on the pecuniary interests register for MPs.

The opposition leader, Daniel Andrews, said he would ask the Independent Broad-based Anti-corruption Commission (IBAC) to investigate.

"I will ask the anti-corruption commission to investigate the awarding of this grant to not any ordinary business person, but to a business leader who the premier is a close personal friend of, and with whom the premier owns a racehorse," he told Fairfax Radio on Monday.

"There is an association here. There is a clear conflict of interest that has not been declared.

"We need to know whether or not it has been managed. We need to know whether or not the premier has been involved in this. Documents need to be made available. Records of communication need to be made available."

Andrews said the former Labor government twice awarded similar grants to Midfield Meats.